CDL’s Group CEO cautious on latest cooling measures
City Developments Ltd‘s (CDL) group chief executive, Mr Sherman Kwek has taken a wary approach on the property market’s outlook in coming months as he believes that the impact from the latest round of property cooling measures will be fairly different from those earlier ones introduced between 2010 to early 2013.
During then, private home buyers were able to get around all the negativity surrounding the market; seeing a tremendous surge in terms of home prices and transaction volume.
It was noted the property developers sold approximately 16,000 units each year from 2010 to 2011 – before hitting a new high with 22,197 private homes sold in 2012. In addition, prices have also risen progressively until the Total Debt Servicing Ratio (TDSR) was introduced in June 2013 to significantly cool off the property market.
Mr Kwek believes that the latest cooling measures will slow down the pace of the group’s sales and clearing of its existing inventory. He also added that property prices will be certainly affected as seen in some of the recent new launch projects and down the road, developers may be launching their projects at 10% to 15% lower than what they could have achieved in terms of psf pricing.
Furthermore, Mr Kwek commented that these developers were somewhat “lucky” because they had bought those sites at an earlier timing and therefore they have that “buffer” in terms of profit margin. However, the market is unlikely going to witness a massive drop in property prices because most property developers have acquired their land at very steep prices in the last 1 year.
His father, Mr Kwek Leng Beng who is the executive chairman of CDL, said that his biggest concern is more on the market sentiments as prospects will likely take the “wait-and-see” approach and this will significantly bring down sales volume.
It was noted that CDL had experienced a tremendous sales performance in the 1st half of 2018, with New Futura making the top of the chart, followed by the 87.9% take-up rate achieved at Gramercy Park.
Nonetheless, one notable positive effect from the property cooling measures is that developers will take a more cautious approach down the road when comes to land bidding, in the hope that it will help moderate some of the tender prices under Government Land Sales and repress the en bloc craze that’s been going on.
According to reports, one of CDL’s upcoming projects Whistler Grand at West Coast Vale will be slated for launch in November 2018 and will also be releasing projects on both Handy Road and Amber Park sites; another executive condominium project at Sumang Walk.